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TCP study guide

TCP CPA Exam Study Guide for 2026.

TCP rewards candidates who like tax rules and planning logic. The goal is to know how a transaction affects tax outcomes before and after it happens.

Practice TCPTCP question page

By World of Accountants editorial team. Last reviewed August 23, 2026. World of Accountants is independent and not affiliated with the AICPA, NASBA, Becker, NINJA, UWorld, Gleim, or other CPA review providers.

TCP sample question

See the kind of TCP judgment this guide prepares you to answer.

Use the example to test your starting point, then move into a focused TCP set while the idea is fresh.

TCP-000002TCP-IIChoice of entity

During individual tax planning, owners are choosing between partnership and corporate form for a new business. What is a major tax consideration?

  1. A.Treat that factor as outside choice of entity unless management requests a different treatment
  2. B.They should consider the timing and level of taxation to the entity and owners.
  3. C.Only the business logo matters for taxes
  4. D.All entities are taxed exactly the same way
Answer: B. They should consider the timing and level of taxation to the entity and owners.

They should consider the timing and level of taxation to the entity and owners.

Why the other answers are wrong
  • A. The choice "Entity choice never affects tax planning" misses the issue because entity choice can significantly affect tax treatment.
  • C. The choice "Only the business logo matters for taxes" misses the issue because branding is not the tax consideration.
  • D. The choice "All entities are taxed exactly the same way" misses the issue because different entity forms have different tax consequences.

What TCP tests

TCP focuses on tax compliance and planning. Candidates need rule recall, but they also need to apply tax planning logic to individuals, entities, basis, property transactions, losses, and compliance decisions.

How to study it

Identify the taxpayer, the tax year, the transaction, and the limiting rule. That keeps review practical instead of abstract.

High-value topics

Individual tax planning, entity tax compliance, basis, distributions, loss limitations, property transactions, retirement planning, gift and estate basics, and tax procedure.

Practice plan

Start with a focused TCP set, review every missed explanation, bookmark weak items, then retest those topics later in the week.

Study workflow

Use TCP questions as a review system, not a click-through drill.

The fastest way to waste a question bank is to answer a set, glance at the score, and move on. For TCP, treat every missed question as a note about how you read facts, applied rules, or eliminated distractors.

Before the set

Choose one constraint: a topic, area code, difficulty level, or missed-question mode. Focused sets make the review pattern easier to see than a huge mixed session.

During the set

Answer before looking at explanations. If you are stuck, identify the fact that should decide the answer instead of guessing from familiar keywords.

After each miss

Write the miss type in plain English: rule memory, reading error, calculation setup, judgment call, or tempting distractor. That note tells you what to repair.

Later in the week

Return to bookmarks and weak topics after a gap. Reworking a missed TCP idea later is more useful than repeating it immediately from short-term memory.

TCP topic guides

Use these TCP topic pages before your next practice set.

TCPBasis and loss limitations for TCP CPA candidates

Owner basis, at-risk limits, passive activity limits, suspended losses, and ordering.

 TCPEntity tax planning for TCP CPA candidates

Entity choice, distributions, owner basis, compensation, and planning tradeoffs.

 AUD / FAR / REG / BAR / ISC / TCPHard CPA practice questions for exam-like review

Hard CPA questions across all six sections with explanations and review tools.

 AUD / FAR / REG / BAR / ISC / TCPCPA practice test-style MCQ sets

Build a practice test-style MCQ set with explanations and section filters.

 BAR / ISC / TCPBAR vs ISC vs TCP: which CPA discipline should you choose?

Compare the three CPA discipline choices before choosing your path.

Sample questions

Try a few TCP examples before opening the full bank.

These are real questions from the current question bank. The practice app includes more questions, filters, explanations, bookmarks, and progress tracking.

TCP-000001TCP-IIndividual tax planning

During individual tax planning, a taxpayer can either claim the standard deduction or itemize deductions. What should drive the decision?

  1. A.The taxpayer generally chooses the option producing the greater allowable deduction.
  2. B.The taxpayer must itemize if any deductible expense exists
  3. C.Treat that factor as conclusive for individual tax planning without considering the rest of the fact pattern
  4. D.The choice has no effect on taxable income
Answer: A. The taxpayer generally chooses the option producing the greater allowable deduction.

The taxpayer generally chooses the option producing the greater allowable deduction.

Why the other answers are wrong
  • B. The choice "The taxpayer must itemize if any deductible expense exists" misses the issue because taxpayers generally compare standard and itemized deductions.
  • C. The choice "The standard deduction is always lower" misses the issue because the standard deduction may be higher for some taxpayers.
  • D. The choice "The choice has no effect on taxable income" misses the issue because the deduction choice affects taxable income.
TCP-000002TCP-IIChoice of entity

During individual tax planning, owners are choosing between partnership and corporate form for a new business. What is a major tax consideration?

  1. A.Treat that factor as outside choice of entity unless management requests a different treatment
  2. B.They should consider the timing and level of taxation to the entity and owners.
  3. C.Only the business logo matters for taxes
  4. D.All entities are taxed exactly the same way
Answer: B. They should consider the timing and level of taxation to the entity and owners.

They should consider the timing and level of taxation to the entity and owners.

Why the other answers are wrong
  • A. The choice "Entity choice never affects tax planning" misses the issue because entity choice can significantly affect tax treatment.
  • C. The choice "Only the business logo matters for taxes" misses the issue because branding is not the tax consideration.
  • D. The choice "All entities are taxed exactly the same way" misses the issue because different entity forms have different tax consequences.
TCP-000003TCP-IIILike-kind exchanges

During individual tax planning, a taxpayer exchanges business real property for other qualifying real property. What treatment may be relevant?

  1. A.Treat that factor as conclusive for like-kind exchanges without considering the rest of the fact pattern
  2. B.The rule applies to all personal-use property
  3. C.Like-kind exchange nonrecognition may apply if the requirements are met.
  4. D.Defer evaluation of the matter unless another procedure independently identifies an exception
Answer: C. Like-kind exchange nonrecognition may apply if the requirements are met.

Like-kind exchange nonrecognition may apply if the requirements are met.

Why the other answers are wrong
  • A. The choice "The entire exchange is always taxable in full" misses the issue because qualifying real property exchanges may receive nonrecognition.
  • B. The choice "The rule applies to all personal-use property" misses the issue because personal-use property generally does not qualify.
  • D. The choice "The taxpayer can ignore basis tracking" misses the issue because basis tracking remains necessary.
TCP-000004TCP-IIPartnership basis

During individual tax planning, a partner receives cash exceeding outside basis. What is the general result?

  1. A.Treat that factor as conclusive for partnership basis without considering the rest of the fact pattern
  2. B.The partner recognizes an ordinary deduction
  3. C.The partnership increases the partner's basis for the excess
  4. D.The partner recognizes gain to the extent cash exceeds outside basis.
Answer: D. The partner recognizes gain to the extent cash exceeds outside basis.

The partner recognizes gain to the extent cash exceeds outside basis.

Why the other answers are wrong
  • A. The choice "The excess cash is always tax-free" misses the issue because cash above outside basis generally triggers gain.
  • B. The choice "The partner recognizes an ordinary deduction" misses the issue because excess cash distributions do not create a deduction.
  • C. The choice "The partnership increases the partner's basis for the excess" misses the issue because cash distributions generally reduce basis before gain recognition.
TCP-000005TCP-ILoss limitations

During individual tax planning, a taxpayer has passive losses but no passive income. What limitation may apply?

  1. A.Passive losses may be suspended unless an exception applies.
  2. B.Treat that factor as conclusive for loss limitations without considering the rest of the fact pattern
  3. C.The losses are converted to tax credits
  4. D.The losses increase gross income
Answer: A. Passive losses may be suspended unless an exception applies.

Passive losses may be suspended unless an exception applies.

Why the other answers are wrong
  • B. The choice "Passive losses always offset salary without limitation" misses the issue because passive activity rules can limit offsets.
  • C. The choice "The losses are converted to tax credits" misses the issue because passive losses are not automatically credits.
  • D. The choice "The losses increase gross income" misses the issue because losses do not increase gross income.
TCP-000006TCP-IIEntity taxation and planning

A partner begins with outside basis of $40,000. The partner is allocated 60% of the partnership's $90,000 ordinary income, the partner's share of liabilities increases $15,000, and the partner receives a $30,000 cash distribution. What is ending outside basis?

  1. A.$54,000
  2. B.$64,000
  3. C.$79,000
  4. D.$109,000
Answer: C. $79,000

The basis roll-forward is $40,000 + $54,000 allocated income + $15,000 liability increase - $30,000 cash distribution = $79,000.

Why the other answers are wrong
  • A. This does not include both the allocated income and the liability increase before subtracting the distribution.
  • B. This omits one of the stated basis increases or applies the distribution incorrectly.
  • D. The cash distribution must reduce outside basis under the stated facts.
TCP-000007TCP-IIILoss limitations

A taxpayer has a $60,000 passive activity loss, outside basis of $35,000, amount at risk of $25,000, and $5,000 of passive income. Assume the limitations apply in that order and no exception applies. What amount is currently deductible?

  1. A.$5,000
  2. B.$25,000
  3. C.$35,000
  4. D.$60,000
Answer: A. $5,000

Basis allows no more than $35,000, the at-risk rule allows no more than $25,000, and the passive limitation allows only the $5,000 of passive income currently. The remaining amounts are suspended under the applicable limits.

Why the other answers are wrong
  • B. The at-risk amount is not the final current deduction because the passive-activity limitation applies afterward.
  • C. Outside basis is an earlier ceiling, not the amount deductible after at-risk and passive limits.
  • D. The loss must pass each stated limitation before it is currently deductible.
TCP-000008TCP-IIIProperty transactions

A taxpayer receives property by gift when the donor's basis is $50,000 and the property's fair market value is $40,000. The taxpayer later sells it for $45,000. Assume no gift tax adjustment. What gain or loss is recognized?

  1. A.$5,000 gain
  2. B.$5,000 loss
  3. C.$10,000 loss
  4. D.No recognized gain or loss
Answer: D. No recognized gain or loss

For a later gain, the donor's $50,000 basis applies, and the sale for $45,000 produces no gain. For a loss, the $40,000 fair-market-value basis applies, and the sale for $45,000 produces no loss. The sale falls in the dual-basis gap.

Why the other answers are wrong
  • A. The sale price is below the donor's gain basis, so it does not create a gain.
  • B. The fair-market-value loss basis is $40,000, and the sale price exceeds it.
  • C. The difference between donor basis and fair market value is not automatically a recognized loss.

Next step

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